UK Strategy for Financial Wellbeing sets out urgent recommendations to address impact of the COVID-19 crisis

New report urges financial service firms to waive interest for people in financial difficulty, and calls on DWP to maintain increase in universal credit standard allowance

A new report from the UK Strategy for Financial Wellbeing has set out urgent recommendations to address the impact of the coronavirus (COVID-19) crisis.

In Building the UK’s financial wellbeing in the light of COVID-19, published today, the Independent Challenge Chairs - appointed by the Money and Pensions Service to bring forward proposals as part of the UK Strategy for Financial Wellbeing - set out 13 recommendations to address the financial impact of the pandemic, including that -

• the Financial Conduct Authority (FCA) should explicitly require all firms to embed vulnerability strategies that reflect the ways that COVID-19 has deepened existing vulnerabilities, and placed new people in vulnerable circumstances;
• the FCA should build on its guidance that requires firms to support people coming out of COVID-19 payment deferrals with increased overdraft or credit card commitments, with firms required by default to offer repayment plans and waive interest for people who are in serious difficulty;
• Fair4All Finance, Toynbee Hall and Fair by Design - with HM Treasury’s support - should progress the design and pilot of a no-interest loans scheme targeted at those most in need;
• HM Treasury and HMRC should further build on their efforts to publicise ‘Help to Save', and should review their communications plans and specifically target anyone newly eligible because of the COVID crisis;
• the DWP should maintain and extend relief measures put in place to help people who rely on welfare benefits and whose finances have been made worse by COVID-19, and go further by making the consent system for universal credit consistent with the system for legacy benefits; and
• the DWP should retain the changes to statutory sick pay (SSP) rules that have been introduced to deal with the COVID-19 crisis, and go further by introducing reforms that would make SSP a stronger source of financial support for everyone, not just people with COVID-19.

Welcoming the report, Money Advice Trust Chief Executive Joanna Elson said -

'The report’s recommendation to the government to maintain and extend the benefit relief measures is welcome and follows ours and others calls to extend changes to universal credit by retaining the £20 a week increase beyond April. A stronger focus on supporting people in vulnerable circumstances and promoting the government’s ‘Help to Save’ scheme to anyone newly eligible due to the outbreak are also crucial.

Alongside these measures, we also need to develop safer routes out of debt for those who do fall behind, and to ensure that creditors aren’t making the situation worse. One major priority here must be improving government’s own debt collection practices – which often lag behind best practice in the private sector.

We need a new Government Debt Management Bill to bring fairness to debt collection across central and local government – as well as fundamental reform of the way that bailiffs are used to enforce debts'

For more information, see the UK Strategy for Financial Wellbeing.